We will discuss what factors make share stock prices change, some go up or come down. Why do some share stock prices go up and come down daily? (Author is not registered with SEBI).
Why do some share stock prices change?
Share prices change due to many factors. A few reasons are as follows:
Demand and supply of shares
The price of the stock will increase if the demand for the stock is more than the supply.
Further price of the share will decrease in case the demand is less than the supply of the shares.
Any news about the company?
Depending on the operation of the company, some news will come. If the news is good, then the price will go up.
For example, the start of production in a new plant is good news, so the price will go up.
The news of the increase in raw material prices may cause the stock price to come down.
The raw material price is more important if the raw material cost is a major cost of the product.
Recommendations by news channels and experts
There are many financial news channels and also many experts recommending the shares.
Depending on the buy or sell recommendation, the share price may increase or decrease.
Government rules affecting individual stock prices change
The government makes many rules related to companies. This is to protect the interests of all.
The government is making many policies. These policies may be favourable or not, which also determines the change in stock price.
For example, these rules can be for price control. raw material control, import and export taxes, etc.
If a rule made by the government is in favour of the company, then the price may go up.
For example, the policy of mixing ethanol in petrol will increase the demand for ethanol. So sugar companies may benefit, and the share stock prices will go up.
Recently, there was a run-up in the share price of sugar companies.
Change in demand for the product of the company
Sometimes, the demand for the company’s product changes suddenly.
For example, the closure of some competitor plants of the same product will help the company. So there will be a change in stock prices.
Management actions of the companies
Management may decide to sell a unit or go for expansion.
These decisions also affect the stock price.
Reward, frauds, govt support, change in management, etc
Any change in information of the company
Generally, we get information about the company from many sources. Any change in information may affect the decision of the investor to buy or sell. So the stock prices change, especially if a big investor changes his mind.
The above factors will be different for different companies, so the change in the price of the stock will be different for different companies.
However long-term price change of the stock depends more on the fundamentals of the company.
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About the Author – G K Agrawal is a retired Sr. DGM from BHEL and an Electrical & Electronics engineering professional with extensive industry and R&D experience. Through this blog and YouTube channel, he shares practical insights to help students and professionals understand real-world engineering applications. Read more about him here.
